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Examining the Implementation Issues of the Real Estate Investment Trust Act (REIT)


This paper revisits the REIT law (RA 9856) and examines the issues that hamper its implementation. After more than two years after it lapsed into law, no single REIT has been established in the Philippines due to contentious provisions in the IRR and the corresponding BIR Revenue Regulation.

There are two contentious issues raised by prospective investors regarding the IRR. One is the 40 percent minimum public float requirement to be increased to 67% within three years of listing. Investors argue that the minimum public float requirement would effectively dilute ownership and give up control of REITs. To avail the incentives is contingent upon meeting the required public ownership requirements as well as allocation to shareholders of at least 90 percent of the distributable income. The other is the 12 percent VAT on the initial transfer of real property into the REIT vehicle. Investors are seeking exemption from the VAT payment as the tax immediately places a cost on REITs even before they start making money.


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Oct 13, 2015